Why Shared Ownership could be a more affordable path to homeownership
Ever wondered why Shared Ownership is often more affordable than buying a home outright? The answer lies in shared costs and a much lower barrier to entry. With this scheme, you're only purchasing a portion of a property – which means a smaller deposit, reduced mortgage requirements, and rent on the remaining share. This guide breaks down how Shared Ownership can make stepping onto the property ladder more achievable, especially for first-time buyers.
What is Shared Ownership?
Shared Ownership is more than just an alternative housing option; it’s a smart first step towards full homeownership. Through the scheme, you purchase a share of a property (usually between 10% and 75%) and pay rent on the remaining portion. You can then gradually increase your share over time through a process known as staircasing.
This model lowers the financial barriers typically associated with owning a home, giving more people the opportunity to get on the property ladder sooner rather than later.
Lower deposits, less stress
One of the biggest advantages of Shared Ownership is the reduced deposit. Saving for a hefty deposit is often the biggest hurdle for would-be homeowners. With Shared Ownership, you’ll only need to put down a deposit based on the value of your share – often just 5% to 10%.
Because the deposit is calculated on your share and not the full market value of the property, the upfront costs are significantly lower. This makes Shared Ownership ideal for first-time buyers, those with limited savings, or anyone looking for a more affordable way into homeownership.
Smaller mortgages, more manageable payments
With Shared Ownership, you’ll only need a mortgage for the share you’re buying – not the full value of the home. This means your borrowing requirements are lower, your monthly repayments are more affordable, and you can access a more manageable route to owning a property.
In England, the average home costs over eight times the average annual income. Shared Ownership helps bring those figures down, often keeping your mortgage within four times your income – a much more sustainable figure for most buyers.
How rent works with Shared Ownership
Alongside your mortgage payments, you’ll pay a reduced rent on the share of the home you don’t yet own. This rent is typically set at around 2.75% of the remaining share’s value – well below market rates in many areas.
Even better, rent increases are regulated, often tied to inflation indicators like the Retail Price Index (RPI) or the Consumer Price Index (CPI). This ensures your payments remain predictable and fair over time, giving you better control over your monthly budget.
When combined with lower mortgage repayments and reasonable service charges, this creates a more stable and affordable way to live in the home you’re working towards fully owning.
The bottom line: Is Shared Ownership right for you?
If you're looking for a more accessible route into homeownership, Shared Ownership offers a compelling solution. From low deposits and reduced mortgage borrowing to affordable, capped rent, the scheme is designed to help more people achieve their homeownership dreams – without the overwhelming costs.
Whether you're a first-time buyer or someone returning to the property market, Shared Ownership could be the key to unlocking your new home sooner than you think.